John Schnatter sells $6M in Papa John’s shares

After stepping down from the Papa John’s International Inc. board in March following a settlement with the pizza chain, the company’s controversial founder and former CEO John Schnatter has sold 114,061 Papa John’s shares, worth approximately $6 million, or 1.1% of the total 9.9 million shares he owns, according to a May 10 SEC filing.

Schnatter still owns more than 30% of the company’s total shares.

The move comes just one week after Schnatter enlisted the help of financial advisors to help sell all or part of his 31% majority stake in the Louisville, Ky.-based pizza chain. Although the shares represent just a tiny fraction of the total stake Schnatter has in Papa John’s, he has indicated that this will not be the only shares he sheds.

“Based on his analysis of, among other things, investment considerations, economic conditions and public disclosures made by the Issuer, Mr. Schnatter may sell, trade or otherwise dispose of more or less of his Common Stock in the Issuer in the public markets,in privately negotiated transactions, in registered offerings or otherwise, consider and/or implement various alternatives to maximize the value of his investment in the Issuer, or take any other lawful action he deems to be in his best interest,” the original SEC filing stated. “Mr. Schnatter has solicited the advice of financial advisors regarding a possible disposition of all or some of his common stock in [Papa John’s].”

Schnatter originally stepped down as CEO in December 2017 following controversial comments during an earnings call in which he blamed NFL protests for Papa John’s struggles. Following last summer’s reports of racist language and behavior, he resigned as chairman. After more than a half a year of legal battles, Schnatter and Papa John’s have all but completely cut ties.

John Gordon, analyst at Pacific Management Consulting Group said the sale likely represents a small fraction of what Schnatter might try down the line:

“I believe the small stock sale by John is an attempt to test how much the market would react if he eventually dumps his shares,” Gordon said. “He has a duty not to harm the company … and his own share value. So, just a little check.”

Both Papa John’s and a representative for John Schnatter declined to comment on the sale.